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Subsidiary of Brazilian company taking over XL Foods plant

The Canadian Press
Published Wednesday, October 17, 2012 11:54AM EDT
Last Updated Wednesday, October 17, 2012 11:24PM EDT

A subsidiary of a Brazilian-based company that calls itself a leading animal protein processor in the U.S. and Australia has taken over management of XL Foods, the Alberta-based plant at the heart of the recent beef recall.

In a news release issued from its headquarters in Greeley, Colo, JBS USA said the agreement also provides the company an exclusive option to buy the Canadian and U.S. operations of XL Foods.

"We know full well the commitment it takes to manage world-class operations that produce safe and nutritious products for consumers around the world," said Bill Rupp, president and chief operating officer of JBS USA.

"We believe our experienced team will prove an invaluable asset in the management of XL Lakeside and we look forward to exploring our options to purchase XL assets in the near future."

"This action is another positive step to relicensing the XL Lakeside beef plant in Brooks, Alta.," he said. "We welcome the assistance of JBS and their resources."

JBS USA is a wholly owned subsidiary of Brazil-based JBS S.A.

"Upon exercising the exclusive option to purchase the above assets, JBS USA agrees to pay USD $50 million in cash and USD $50 million in JBS S.A. shares," said the company's news release.

"Under no scenario will JBS USA assume any of XL Foods' debt or liabilities.

It was an unexpected development in a dramatic saga that began last month when the Brooks plant -- one of Canada's largest beef processors -- was closed over E. coli contamination.

Earlier Wednesday, Brooks Mayor Martin Shields said the community has been in turmoil over the troubles at XL Foods.

Workers at the plant were laid off again Wednesday as food safety officials prepared to review whether the meat packer can reopen.

"We're in crisis mode," Shields said in an interview with The Canadian Press.

"There are so many of those people who have come to our country," Shields said. "They've made a life for themselves. There's lots of local people who work there, too."

The 2,200 XL workers were laid off last week. About 800 were recalled to work temporarily Tuesday to finish processing beef carcasses as part of a Canadian Food Inspection Agency assessment of the plant.

"The workers completed the job. They are now laid off again. We are waiting on the CFIA to decide when the plant can reopen," said Doug O'Halloran, president of the United Food and Commercial Workers union.

"I think the earliest we are looking at now is Friday or maybe Monday."

The agency said it expected to complete a report and make a recommendation to the federal government about the plant before the beginning of next week.

The CFIA said its review in the coming days will include how well the XL Foods is handling E. coli controls, meat hygiene, sampling techniques and overall sanitation.

The agency said it will also analyze the results of tests done on the meat by XL Foods and CFIA inspectors.

"Based on these observations and test results, the CFIA will prepare a report of its assessment and make a recommendation on next steps," the agency said in a release.

The CFIA does not spell out what those next steps could be or how soon the plant might be able to resume slaughtering cattle or sending beef products to market.

On Tuesday night, the food agency announced yet another recall of beef from the plant, this time involving brands sold under different product names in British Columbia and Alberta.

The recall of more than 1,800 products now involves 33 retail chains across Canada.

The meat packer, the second-largest in Canada, has not been allowed to export beef products into the United States since Sept. 13.

Fifteen people in four provinces have become ill from a strain of E. coli linked to the XL plant.

Some people have filed lawsuits against the company, including 15-year-old Cody Farmer of Nanaimo, B.C. In his statement of claim Farmer said that he required surgery after he was exposed to E. coli.

Erin Thornton of Vancouver has filed a statement of claim proposing a class-action lawsuit for people who fell ill from E. coli and those who had to throw out recalled beef. Other lawsuits have been filed in Ontario, Alberta, Saskatchewan and Quebec.

Statements of claim contain allegations that have not been proven in court.

JBS USA employs more than 60,000 employees in the U.S. It processes, prepares, packages and delivers fresh, further processed and value-added beef and pork products for sale to customers in more than 60 countries on five continents.

It is also a majority shareholder of Pilgrim's Pride Corp., the second largest poultry company in the U.S.